The author has been described by News Ltd as an "iconoclast", "Svengali", a pollie's "economist muse", and "pungently accurate". Fairfax says he is a "Renaissance man" and "one of Australia’s most respected analysts." Stephen Koukoulas concludes that he is "85% right", and "would make a great Opposition leader." Terry McCrann claims the author thinks "‘nuance’ is a trendy village in the south of France", but can be "scintillating" when he thinks "clearly". The ACTU reckons he’s "an enigma wrapped in a Bloomberg terminal, wrapped in some apparently well-honed abs."

Friday, March 18, 2011

MJ's spoken: short Aussie rates b/c economy is accelerating

This is probably still a tad risky given all of the external event risk, but the logic is otherwise bullet-proof. Here is what UBS's Matt Johnson has to say given the acceleration in the Westpac-ACCI index:

"We recommend paying AUD 2yr IRS at 5.06%. We target a move to 5.35% (the 14 Feb breakdown) and place our stop at the next support (4.95%). Due to the modest rate hikes priced into the AUD short end, the trade costs 6bps/3m in carry...

The ACCI-Westpac survey of industrial trends (released Thursday 17 March) shows that the Australian economy is picking up pace. This survey correctly foreshadowed the H2’10 slowdown, and now foreshadows a strong acceleration. The expected composite index rose 11.5pts to 66.6 – the highest level since March 1974. New orders, which had correctly signalled the H2’10 slowdown, firmed (actual +5, to 19, expected +37, to 37); and this has caused an improvement in the labour market: hiring is up (actual +7pts to +6; expected +11pts to 11), and overtime has surged (actual +6pts to 9; expected +44pts to +23)."